My industry has always been as difficult as it is magical. In the post-pandemic era, the challenges are categorically greater.
The threat to restaurants during the pandemic was obvious; It was a fact that many would not come out on the other side. In 2024, restaurants are back! No, restaurants are dying! No, restaurants are (sometimes) busy! It's whiplash, day to day.
For many, including my restaurant, Botanica, solvency is more difficult than ever due to the high cost of doing business. Since we opened Botánica almost seven years ago, our labor costs have increased 40% for hourly workers and 25% for salaried managers, as a result of minimum wage increases and market rate wage increases. Our rent has increased by 17%. Our sales, on the contrary, have grown only 2.3%.
Obviously, this creates an almost impossible status quo. In our industry, there are no mechanisms to alleviate costs other than cutting spending on goods and labor.
In other words: there is no way to balance the books without compromising the quality, vision and values that define a business like ours. There are no tax breaks on expensive insurance policies or credit card processing fees. And if we transferred costs to our customers, we would be compromising the vision and values that make us what we are. It is an absolute enigma.
Heather Sperling, co-owner of Botanica, at her restaurant in Silver Lake. For many restaurants, “solvency is more difficult than ever due to the high cost of doing business.”
(Michael Blackshire / Los Angeles Times)
Our way of doing business is threatened. From frequent conversations with restaurateur friends (including my co-founders of Regarding hera nonprofit focused on women leaders in the food industry), I know that what Botanica is going through right now is far from unique.
Why does this matter? Neighborhood-oriented restaurants are vital to communities and economies. They are meaningful gathering places and trusted local employers. They support many other businesses: cleaners, farmers, coffee roasters, winemakers, equipment technicians, etc. They are small and personal and therefore accessible and accountable in a way that larger companies are not. They are often led by owners and managers who care deeply about their people, their neighborhood, and their impact—even more than they care about their bottom line.
I know this because Emily Fiffer (co-owner of Botanica) and I are among these people. And we're friends with dozens of like-minded homeowners throughout Los Angeles and beyond.
Eating at a place like Botanica can be indulgent. Spring menu items range in price from $14 for a marinated bean tostada to $36 for Baja striped bass. But from our perspective, the purpose of our business is not just to provide an enjoyable evening with local, sustainable, beautifully prepared produce and natural wine. Our goal is to run a business with the most positive impact possible on our community, economy and environment, a business that embodies what we call “nourishing hospitality.”
Two diners share a meal during canned fish happy hour at Botanica restaurant in Silver Lake.
(Michael Blackshire / Los Angeles Times)
The exhibition of canned fish in Botánica. The restaurant also has a market filled with homemade items and products from local businesses, mostly owned by women.
(Michael Blackshire / Los Angeles Times)
There is an economic concept called the “multiplier effect,” which describes how the effect of spending is greater than the money originally spent. While every dollar you spend impacts the economy in some way, restaurants must surely offer the best bang for your buck, so to speak.
So one day I sat down to try to calculate exactly how this works with our model and I came up with a surprising number.
Decade $1 spent by a customer at Botanica in 2023, $1,005 went back out the door.
Of that, 86.7 cents He opted for “the good things”, that is, people, companies and causes that it feels good to support; 53.2 cents pays for 50 staff members (including insurance, benefits and high payroll taxes); 26.2 cents buy products from a sensational network of farmers, suppliers and manufacturers doing ethical and sustainability-focused work, who in turn employ countless passionate people; and 7.3 cents pays for a group of small businesses that perform supporting functions: our cleaning team, floristry, laundry services, a cavalcade of local equipment repair staff, the family-owned supplier of our recyclable and compostable take-out and market packaging, etc. .
And then 13.8 cents goes toward occupancy costs (rent, utilities, and trash/recycling/compost collection); administrative costs (office supplies, our accountant, various applications and tools essential for operations, telephone and internet, etc.); and the cost of credit card processing: 3.1 cents. I really wish we could spend somewhere else!
Botanica is open for breakfast, lunch and dinner. Sperling stops by a table to chat with customers Zal Batmanglij, center, and Blake Holland, right.
(Michael Blackshire / Los Angeles Times)
The national average profit margin for independent restaurants is often cited to be in the area of 3% to 5% (sometimes higher, often lower). This profit is necessary to retain staff (raises), reinvest in infrastructure (endless repairs to property and equipment), weather problems (a power outage can result in losses of thousands of dollars), and pay off investors, often friends and relatives, who financed the company in the first place.
Botánica closed 2023 with a profit of 1.19%, but not from restaurant operations; those were just a little less than the break-even point. Our income was boosted by a handful of commercial photo shoots done at the restaurant on days we were closed.
Of course, Botanica is a more labor-intensive model than many of our cohort. We are open for breakfast, lunch and dinner; We have a robust coffee, tea, and baking program, and the front of our space is a market filled with natural wine, homemade goods, and products from local, mostly women-owned businesses. These are laborious tasks that require substantially more staff (with specialized training, no less) than a dine-in only establishment. But these elements of our business, as expensive as they are, are what make us an especially useful and multifaceted neighborhood place.
All of this is to say that a restaurant like Botanica, like so many other independent, owner-operated neighborhood restaurants across the country, exists, first and foremost, to nourish its people. Hospitality is innately altruistic, and the neighborhood restaurant is especially so, preciously and precariously.
The Botanica market also sells natural wines, along with its selection of homemade products and local products.
(Michael Blackshire / Los Angeles Times)
A waiter prepares a drink at Botanica. Co-owner Sperling says that since he opened the restaurant almost seven years ago, labor costs have increased 40% for hourly workers and 25% for salaried managers.
(Michael Blackshire / Los Angeles Times)
I don't have any big solutions to propose, although I do believe that low-margin, financially uncertain companies like ours will need structural support to continue to exist. That 3.11% of revenue going to credit card processing fees ($98,725 last year, paid to our point-of-sale system, Toast) would be a transformative addition to our results. And I would prefer to reinvest some of the 4.89% that went to payroll taxes ($155,000 in 2023) into our team.
In the absence of legislated solutions, everything depends on the diners. Almost 20 years ago, just when I was starting out in the world of food, Michael Pollan introduced the concept of “voting with your fork”through his fundamental book “The Omnivore's Dilemma”; It's her way of succinctly expressing the importance and power your daily food choices can have.
I’ve been trying to find a corollary that relates to the restaurant world: “dining with your values” doesn’t have the same ring to it; My suggestion box is open! – as a way to convey what it means to support restaurants not only for the creative, lively and exciting food they serve, but also for the broader philosophy that informs their work and exponentially impacts their small corners of the world.
Because in order for us to continue doing what we do, we need your support and your understanding of the positive ripple effect your support has. I hope this encourages you to feel good about your next brunch, dinner, coffee, or cocktail at a thoughtful, community-minded restaurant near you.
It means more than you may know.
Heather Sperling is co-founder and co-owner of Botanica, a restaurant and market in Silver Lake, Los Angeles.
